Positioning The PBM For Long-term Success

Transcription

1 A Pharmacy Innovation Company Positioning The PBM For Long-term Success Per Lofberg Executive Vice President

2 The Past Three Years Have Set The Stage For Long-term Success Integrated model embraced by market and business fundamentals are strong $24 billion of net-new business over past three years Established leadership positions in Medicare and Managed Medicaid Continued investments and rapid growth in specialty pharmacy Expanding suite of clinical programs gaining adoption Streamlining initiative improving competitiveness and cost structure 2

3 Rapidly-changing Pharmacy Landscape Requires Increased Focus On Specialty % Of RXs 14.5% % Of $ 36% Reduce spending on expensive drugs without unique clinical benefits 84% 33% Maximize use of cost effective generics and improve adherence 1.5% 2016E 31% Proactive management to optimize use and control trend Brand Generic Specialty Rigorous cost management is crucial, with focus on high-cost specialty drugs Sources: CVS Caremark analysis; Generic Drug Savings in the U.S., Generic Pharmaceutical Assn. 2012; Payer Strategies to Manage High- Cost Specialty Drug Expected to Hit Market Soon, Atlantic Information Services Webinar, August,

4 PBM Market Shifting From Traditional Group Plans To Individual Choice Plans Employer Lives Decline ~15% PBM Managed Lives By Segment (millions) Health Plan E E Trad - EMP RDS EGWP Trad - HP Medicare Private exchange Mgd. Medicaid Ind. / exchanges Note: Population of PBM managed lives excludes Uninsured and Medicaid FFS segments. Sources: CVS Caremark analysis; 2012 Medicare Trustees Report. 4

5 PBM Industry Consolidation Driven By Changing Market Dynamics Past Companies Company 2013 Market Share PharmaCare (CVS) Caremark PCS Advance Paradigm RxAmerica 26% Express Scripts ValueRx NextRx (WellPoint) DPS NPA Medco 34% Prescription Solution / Optum Medco Carve-in 12% WHI Catalyst FutureScripts RegenceRx SxC NMHC HealthTrans 5% Prime 5% Notes: 1. Market share calculated on revenue basis, as percent of estimated $283 billion market. 2. Express Scripts and OptumRx estimated on a pro-forma basis, adjusted for shift of UNH volumes from Express Scripts to OptumRx upon termination of the legacy Medco contract. 5

6 Significant Consolidation In PBM Industry Share Of Total PBM Market ($ billions projected revenues) Express Scripts OptumRx Prime Catamaran Humana MedImpact Cigna All Other Captive Revenue Network Revenue Top two PBMs represent 60% of overall revenues Note: CVS Caremark figure reflects mid-point of guidance range; CVS Caremark captive revenues include mail, specialty and CVS Retail. Sources: Total Market Revenues, IMS ; company 10-K filings; CVS Caremark analysis. 6

7 Our Integrated Model Is Focused On Growth Areas Traditional PBM (ESRX) Captive Health Plan (OptumRx) Growing Traditional Employer Commercial health plan Medicare Medicaid Individuals/ exchanges ACOs 7

8 Our Capabilities Support The Increasing Importance Of Clinical Outcomes Medicare Stars Focus shift to clinical measures Accountable Care Organizations Moving toward provider risk models versus fee-for-service Pay-for-performance models will play an increasingly important role Patient Centered Medical Homes Opportunity to collaborate with clients and physicians Improved outcomes from better adherence and addressing gaps in care critical to provider performance 8

9 CVS Caremark Is Uniquely Positioned To Win In The Marketplace Differentiation through our integrated model Scale combined with financial, technological and people strengths Leadership in growing government market segments Investing in specialty pharmacy and clinical programs CVS Retail presence supports emerging product offerings 9